Best Practice Recommendation – Example and Enforcement Remedies (CALSTRS)

Fiduciary Essentials for Defined Benefit Plans Part 3: Governance Best Practice Recommendation – Example and Enforcement Remedies (CALSTRS)

Regulation requires current & potential money managers communicate with CIO
Restricts board members outside communication with money managers
Board members required to attend annual training sessions that detail their responsibilities to fund participants and beneficiaries
Board agreed to seek state legislation requiring placement agents to register as lobbyists
Ordered investment firms to disclose their use of placement agents, amount they are paid and services they perform.
- Applies to vendors that provide money management or fund management services, investment advice or consulting and investment support services (including market research, fund accounting, custodial services and fiduciary advice).
Policies policies covers campaign contributions to or on behalf of officers and employees, existing Board members, the Governor, Controller, Treasurer and Superintendent of Public Instruction (latter 3 sit on Board) and candidates for Board members and the four political offices.
Enforcement remedies.
- Vendor seeking a relationship found to be in violation is disqualified from engaging in investment relationship with CalSTRS for two years.
- Vendor who has an existing relationship found to be in violation is disqualified from doing future or additional business for two years. For private equity funds will apply to next fund.
- Exemption for inadvertent violations.